Employee Pension Scheme: Now the amount of pension received by the employees under EPS can increase. A hearing for this is being held in the Supreme Court. It is expected that the limit on the amount fixed earlier on pension may be removed.
Employee Pension Scheme: There is a constant demand to remove the capping on Employees Pension Scheme (EPS). Now the Supreme Court is also hearing the matter. In the current framework, a maximum limit of Rs 15000 per month has been fixed for pension under the EPS scheme. When an employee becomes a member of Employees’ Provident Fund (EPF), he also becomes a member of EPS.
The contribution of 12% of the basic salary of the employee goes to PF. Apart from the employee, this part also goes to the account of the employer. But, a part of the employer’s contribution is deposited in the EPS ie Employee Pension Scheme. The contribution of basic pay in EPS is 8.33%. However, the maximum limit of pensionable salary is Rs 15,000. In such a situation, only a maximum of Rs 1250 can be deposited in the pension fund every month.
According to the existing rules, if the basic salary of an employee is Rs 15,000 or more, then Rs 1250 will be deposited in the pension fund. If the basic salary is 10 thousand rupees then the contribution will be only 833 rupees. The calculation of pension on the retirement of the employee is also considered as the maximum salary of 15 thousand rupees only. In such a situation, after retirement, employees can get only Rs 7,500 as pension under the EPS rule.
According to Bhanu Pratap Sharma, retired Enforcement Office of EPFO, if the limit of Rs 15,000 from pension is abolished, then more than Rs 7,500 can be got pension. But, for this, the employer’s contribution to the EPS will also have to be increased.
Know how pension is calculated?
- Formula for EPS calculation = Monthly Pension = (Pensionable Salary x
No. of Contribution to EPS Account)/70.
- If one’s monthly salary (average of last 5 years salary) is Rs 15,000 and the tenure of the job is 30 years, then he will get a pension of only Rs 6,828 per month.
- If the limit is removed, how much will be the pension?
- If the limit of 15 thousand is removed and your basic salary becomes 20 thousand, then the pension you will get according to the formula will be the same. (20,000 x 30)/70 = Rs 8,571
Existing Conditions for Pension (EPS)
- Must be an EPF member.
- Must be in job for at least 10 regular years.
- Pension is available on attaining the age of 58 years.
- Option to take pension after 50 years and even before the age of 58 years.
- On taking the first pension, you will get the reduced pension.
- For this, Form 10D has to be filled.
- On the death of the employee, the family gets pension.
- If the service history is less than 10 years, then they will get the option to withdraw the pension amount at the age of 58 years.